Judiciary Power and Practice - Federalism and foreign policy

It is widely believed that the Constitution's framers sought to
place control of the new country's foreign relations in the hands
of the federal government rather than the states. To ensure that the
country spoke with one voice in international matters, the Constitution
granted the federal courts power to hear all cases between a state or its
citizens and a foreign state or its citizens, and all cases involving
ambassadors, public ministers, or consuls. To the framers of the
Constitution, foreign policy was first and foremost the arena for waging
war and making treaties. However, they also understood that the federal
government must have power over some economic issues like setting tariffs
and duties and issuing currency, all of which affect international trade
and investment. Article 1, Section 10 of the Constitution lists the
activities that states are prohibited from doing, most of which are
related to foreign policy. However, the Tenth Amendment reserves powers
not delegated to the federal government, or prohibited by the Constitution
to the states, to the states or to the people.

The ambiguity of this notion of "dual federalism" has been a
source of confusion from the start. The role of states in foreign policy
was one of the first controversies addressed by the Court in the years
following the writing of the Constitution. In
Penhallow
v.
Doane
(1795) and
Ware
v.
Hylton
(1796), the Supreme Court denied to the states any role in foreign policy
matters, ruling that treaty-making power was not affected by the doctrine
of dual federalism. It helped to minimize disputes in this area because,
for most of the country's history, it was easy to distinguish
between domestic and foreign matters. In the later years of the twentieth
century, however, the lines blurred. This was particularly true in
international economic matters. States and cities routinely sent trade
missions abroad to help local firms export and to encourage foreign
companies to invest locally. Local government forays into foreign policy
accelerated in the 1980s. Many localities enacted boycott legislation to
pressure South Africa to end apartheid. Others passed resolutions
criticizing nuclear weapons, supporting a freeze in the arms race, and
banning nuclear testing. Some formed linkages with Nicaragua and, along
with grassroots organizations, provided more humanitarian aid to the
Nicaraguan people than all the military aid Congress authorized for the
contras, the anticommunist forces supported by the Reagan administration.
Still others welcomed Guatemalan and Salvadoran refugees, established
"sister city" relationships with communities in other
countries (including the Soviet Union), and passed ordinances phasing out
ozone-depleting chemicals.

Opponents of local government involvement in foreign policy proposed three
arguments. The first was that U.S. foreign policy is most effective when
the country speaks with one voice. The second was that foreign affairs,
like all public policies, should be shaped democratically by all who would
be affected. It would be unfair for some states and cities to make
decisions that affect the entire country. The third proposition was that
only the federal government has the expertise to make foreign policy. The
president, through the National Security Council, Central Intelligence
Agency, Departments of State and Defense, and other executive branch
organizations, has far more resources and information (much of it secret
or sensitive) than governors and mayors. These arguments were countered by
the fact that U.S. foreign policy is rarely of one voice. Members of
Congress, different departments within the executive branch, multinational
corporations, and special interest groups have all expressed views at odds
with the president or State Department. In addition, local government
foreign policies may be viewed as an extension of the democratic process,
since local governments concerned about an international issue can develop
policies specific to their citizens' needs, as well as
accountability, since there is no national security apparatus for local
officials to hide behind. Finally, while the federal government may have
access to more information in traditional foreign policy areas (like war
and security), local governments are perhaps more knowledgeable in
economic policy and have more tools at their disposal (such as tax and
other incentives to attract foreign direct investment).

There have been few cases challenging local government foreign policies,
and the Constitution helps to explain why. Under the Articles of
Confederation, the states engaged in trade wars, pursued their own
military campaigns, and carried out independent diplomacy. The
Constitution's framers sought to correct this. First, it is broadly
understood that the framers sought to place foreign policy firmly at the
national level. Second, the Constitution clearly prohibits states from
some foreign activities, including making treaties or engaging in war.
Third, Article 6 of the Constitution provides that laws and treaties of
the United States are "the supreme law of the land" and
prevail (or preempt) state law. Fourth, states may not levy taxes or
duties on imports or exports, or enact regulations that unduly inhibit
interstate or foreign commerce. Consequently, until the late twentieth
century there were relatively few foreign policies enacted by local
government, and only a handful that posed a serious threat to the ability
of the United States to speak with one voice in international relations.

An alternative reading of the Constitution suggests that the framers could
have taken all foreign policy activities away from state and local
governments but chose not to do so. Instead, they enumerated a small
number of limitations on state power. In those instances when local
government has become involved in foreign policy, the executive and
legislative branches usually have done little to discourage such activity.
During the Reagan administration, conservatives in the Justice Department
were reluctant to file suit against municipal foreign policies because of
their support for the principle of states' rights. Thus, local
government foreign policies bring two constitutional principles,
states' rights and a national-level foreign policy, into conflict.

Many of the local government activities of the 1980s and 1990s do not fall
neatly into constitutional categories (like war, treaties, and duties).
For example, the Comprehensive Anti-Apartheid Act of 1986 made it clear
that state and local divestment and antiapartheid legislation could remain
in effect. In such cases, the judiciary resorted to other interpretations.
In
Zschernig
v.
Miller
(1968), the Supreme Court ruled against Oregon. That state's
government had enacted a law requiring reciprocal treatment of property
inherited by a resident alien in Oregon and in the alien's home
country. The Court announced that it would now strike down any municipal
foreign policies having more than "some incidental or indirect
effect" on U.S. foreign relations. The fact that such an effect
could vary in importance over time creates an opening for the judiciary to
increase its influence in foreign policy matters.

One increasingly popular type of nontraditional foreign policy of local
governments is economic sanctions. In 1996, Massachusetts passed a law
that made it more difficult for companies with investments in Burma
(Myanmar) to receive state procurement contracts. This "selective
purchasing" law applied to U.S. and foreign companies and was
challenged at two levels. The European Union and several Asian countries
asked the World Trade Organization (WTO) to determine whether the
"Burma law" violated international trade rules. They felt
that the law was yet another example of U.S.
"extraterritoriality," that is, applying laws originating
within the United States on parties operating beyond the country's
borders. However, the claimants agreed to let the U.S. courts decide on
the case before pressing for a WTO ruling. A group of companies formed the
National Foreign Trade Council (NFTC) and challenged the law within the
federal court system in 1998 in
National Foreign Trade Council
v.
Baker.
The NFTC's argument rested on three points. The first was that the
Constitution gives only the federal government the right to make foreign
policy. The second was that the Massachusetts law violated the
Constitution's commerce clause, which gives Congress exclusive
powers over interstate commerce. The third was that a federal law
prohibiting new investment by U.S. companies in Burma, but passed a few
months after the Massachusetts law, preempted the state law.

Massachusetts supported its position with several arguments. First, the
Constitution explicitly lists the activities in which states may not
engage, but economic sanctions is not one of them. Second, because the
Massachusetts law did not establish direct contact between the state and
Burma, it was not a foreign policy question. Third, important state
interests embodied in the First (freedom of speech) and Tenth Amendments
to the Constitution permitted the law. Finally, since the foreign affairs
doctrine is vague, the courts should leave to the legislative branch the
issue of whether to invalidate the Massachusetts Burma law.

The fuzzy area of the constitutionality of state actions in the
international realm was underlined by the ways in which federal courts
ruled as this case made its way through the judicial system. A federal
judge ruled that the Massachusetts law "unconstitutionally impinges
on the federal government's exclusive authority to regulate foreign
affairs," since the objective of the legislation was to change
Myanmar's domestic politics (specifically, to force the military
junta to recognize the results of a 1990 election). The appeals
court's 1999 ruling was much more sweeping, as it found the Burma
law unconstitutional on all three grounds presented by the NFTC. The
Supreme Court agreed to hear the case (
Crosby
v.
National Foreign Trade Council,
2000) and ruled against Massachusetts—but for yet a different
reason. The Clinton administration avoided taking sides in this dispute,
but revealed its support for the NFTC during the Supreme Court hearing. In
a unanimous ruling, the Supreme Court concluded that the federal statute
banning investment in Burma (enacted shortly after the Massachusetts law)
preempted the Massachusetts law on procurement. In other words, the law
passed by Congress prevented states from having their own sanctions laws
aimed at Burma. The Court has taken a similar approach in other cases,
whereby it has nullified a state or local foreign policy because it
contradicted a specific federal statute, treaty, executive agreement, or
constitutional clause.

Unfortunately, the narrow ruling in the Massachusetts case left the door
open for other state and local government actions in the foreign policy
area. For example, it was not clear whether a state sanctions law is
constitutional when no national law exists aimed at the same country. Nor
did the ruling prohibit other measures, such as divestment by state
pension funds of stock held in firms doing business in undesirable places.
Most importantly, this case presented the courts with the opportunity to
clearly demarcate the limits of states' actions in the foreign
realm, but the Supreme Court was unwilling to make such a bold statement.

The conflicting constitutional principles that thus arose were difficult
to resolve. One solution to controversies of this type was for the courts
to treat local government involvement in foreign policy in the same way
that they usually treat disputes over war powers. By holding that these
are political questions, the courts could leave it to the legislative and
executive branches to create laws permitting or barring various
activities. For example, if Congress did not want states like
Massachusetts enacting selective purchasing laws, it could pass a law
prohibiting them from doing so. In this line of thinking, the courts
should uphold all local government foreign policies, unless such
activities are specifically barred by national legislation or the
Constitution.